If you want to understand what mining is, you will need this article - with its help you can explain all the nuances even to your grandmother.
Mining crypto-currency is a painstaking and expensive business, moreover, unpredictable in terms of profit. And yet many investors who are interested in crypto currency can not resist the mining.
Perhaps the fact is that an enterprising speculator sees in it the opportunity to earn on an equal footing - roughly as in the times of the Gold Rush in California. And if you are technologically well-trained, it is almost impossible to avoid temptation.
But before spending money on equipment, read this guide - it will help you to understand if mining is really suitable for you. We will focus primarily on bitcoin.
Why do I need mining?
Of course, in order to simply use crypto currency, it is not necessary to be a miner. Digital tokens can be purchased for fiat money; exchange through the exchange for other crypto-currenciesBTC.
You can even earn money by playing video games or by posting materials on resources that pay users in the crypto currency. For example, Steemit works, a platform like Medium, except that users can support their favorite bloggers with their own crypto currency called Steem. Then Steem can be easily exchanged for bitcoins.
But the meaning of mining is not only in filling the pockets of the miners: this is the only way to issue new lots of crypto currency. In other words, the miners, in effect, "mint" the Crypto-currency.
For example, on October 25 in circulation there are about 16.6 million bitcoins. Apart from the coins issued with the primary block (created by Satoshi Nakamoto), all these bitcoins appeared as a result of the activity of the miners. Without mining bitcoin will not disappear - they can even be used - but new coins will not appear.
Once bitcoin mining is really over: the protocol limits the maximum number of tokens to 21 million.
How many miners can earn on bitcoin mining?
Bitcoin is mined in blocks, and now the reward for the block is 12.5 bitcoins. At a rate of about $ 5,000, the award will be approximately $ 62,500.
In 2009, when bitcoin mining began, the reward for the block was 50 bitcoins; in 2012, the reward was reduced to 25 coins, and in 2016 - to the current level. Such double declines occur regularly; the next is planned for about 2020 - then the amount of compensation will be reduced to 6.25 bitecoins.
How many blocks have been produced?
A number of sites, including Blockchain.info, provide this information in real time. The current block number at the time of this writing is 491 642.
What do the miners give free bitcoins?
In fact, the miners act as auditors: during the extraction of new coins, all previous transactions are verified at the same time. Thanks to such a system, invented by Satoki Nakamoto, the bitcoin creator, users are interested in stable operation of the network.
By verifying transactions, the miners help to prevent the "double expenditure problem". Double spending refers to a situation in which the user is given the opportunity to spend the same amount twice.
With a physical currency, this can not happen: as soon as you give the seller a 100-ruble note to buy a bottle of vodka, you do not have it anymore, and you can not buy a snack for the same 100 rubles.
However, in the case of a digital currency, there is a risk that the holder will be able to make a copy of the digital token and send it to the seller or other party while retaining the original.
Suppose you have a bill of 100 rubles and a very good photocopy of the same note. If you try to spend it, someone can look at the serial numbers and see that they match, which means that one of the bills is a fake.
Something like this and are engaged in the miners: they check the transactions to make sure that users did not attempt to illegally spend the same amount in bitcoins twice.
Once the miner verifies transactions for 1 MB, he gets the right to get 12.5 bitcoins. The threshold of 1 MB was installed by Satomi Nakamoto, and now some miners believe that the block size should be increased in order to accommodate more data. It's worth noting that, theoretically, there may be one transaction (although this does not happen almost) for 1 MB, and several thousand - all depends on how much data is included in a particular transaction.
Pay attention: the verification of transactions on 1 MB only gives the right to obtain the bitcoins, but does not guarantee the reward.
That is, even after all the work on the verification of transactions, I still can not get my bitcoins?
All right.
In order for you to earn bitcoins, there must be two conditions. One of them depends on your efforts, the other - only on luck:
You need to verify transactions for 1 MB. Everything is simple.
You must the first of all miners to find a solution for a particular mathematical problem. This process is also known as Proof-of-Work - "proof of work".
What is this special mathematical problem?
Good news: You do not need higher mathematics. In fact, each miner tries to guess the first 64-digit hexadecimal number (hash) that is less than or equal to the target hash. This is where the main work lies.
The bad news: Hash is chosen by accidental search, and if you want to be the first, you will need huge processing power. To work successfully, you need to have a high hash-the hashing factor, which is measured in megawares per second (MH / s), gigashes per second (GH / s) and teraxes per second (TH / s).
This is a very, very lot of hashes.
If you want to understand how many bitcoins you have a chance to get with the hashre accessible to you, try using the calculator on the Cryptocompare website.
What equipment will I need?
For mining, either a graphics processing unit (GPU) or specialized devices - ASIC, special purpose integrated circuits, which can cost from $ 500 to tens of thousands of dollars, are suitable.
Some miners, especially in the Ethereum system, collect installations from video cards - this is a relatively budgetary way to achieve an acceptable hashtrait.
In the photo below you can see the self-made installation for mining. Video cards are rectangular blocks with fans. This is not the most effective method of mining, and as you can guess, many miners see it as entertainment rather than a way to earn money.
Mining
Principles of Mining for Dummies
Let's say I told three friends that I planned a number from 1 to 100. I wrote down this number on a sheet that I hid in an envelope. My friends do not even need to guess the exact number - it's enough to name the number first which will be less than or equal to the number in the envelope. The number of attempts is unlimited.
Suppose I'm 19. If friend A says "21", he will lose, because 21 is more than 19. If friend B says "16" and friend C is "12", both answers can theoretically be counted because and 16, and 12 is less than 19. Friend B does not get any additional benefit, although his answer was closer to the target number - the one who will offer his option first will win.
What would happen if friends B and C answered at the same time? In the bitcoin network, simultaneous responses occur regularly, but only one person can receive a reward. In this situation, it is up to the entire network to decide which of the miners is worthy of the award. The decision is made by a simple majority of votes - 51%. As a rule, the reward goes to the miner who performed more useful work, i.e., verified the most transactions.
Now imagine that I have more than three friends, and the number is not limited to a range from 1 to 100. Millions of miners are acting as friends, and the number conceived is 64-digit, and also in hexadecimal notation. As you can guess, guessing the correct answer will be very difficult.
What is this, a 64-digit hexadecimal number?
Well, here's one for example:
0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598ee
In this number 64 numbers. Perhaps you will say that it's not just numbers, but letters, which means it's not a number.
What is going on? To understand what has the letters to do with it, let's see what "hexadecimal" means.
As you know, we use the decimal number system, which means that it is based on the number 10. This, in turn, means that we have 10 separate digits, from 0 to 9.
